Cash receipts A firm has actual sales of $ 60 comma 000 in April and $ 64 comma 000 in May. It expects sales of $ 75 comma 000 in June and $ 95 comma 000 in July and in August. Assuming that sales are the only source of cash inflows and that half of them are for cash and the remainder are collected evenly over the following 2 months, what are the firm's expected cash receipts for June, July, and August?

Question

Hugo Crawford

Business

8 January, 13:10

Cash receipts A firm has actual sales of $ 60 comma 000 in April and $ 64 comma 000 in May. It expects sales of $ 75 comma 000 in June and $ 95 comma 000 in July and in August. Assuming that sales are the only source of cash inflows and that half of them are for cash and the remainder are collected evenly over the following 2 months, what are the firm's expected cash receipts for June, July, and August?

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Raina Graves · Answer 1

Month incurred Amount June July August

June 75,000 37500 18,750 18,750

July 95,000 47,500 23,750

August 95,000 47,500

37,500 66,250 90,000

The expected cash receipts are:

June = $37,500

July = $66,250

August = $90,000

Explanation:

The pattern of collection of sales is that 50% are collected in the months of sales while 25% each will be collected in the following month and following 2 months. For instance, 50% of June sales are collected in June, 25% are realized in July and 25% are collected in August. 50% of July sales are realized in July and 25% are collected in August.